Stocks pare losses after the Dow flirted with 11-year lows
NEW YORK -- The stock plunge continued on Wall Street Friday as investors worried about the fate of the nation's ailing banking system and battered economy drove the broad stock market temporarily to fresh bear market lows — and the Dow to its lowest level since October 1997.
But stocks pared their losses in afternoon trading after the White House sought to douse fears that the government would nationalize crippled banks.
White House press secretary Robert Gibbs said Friday afternoon the Obama administration continues to "strongly believe that a privately held banking system is the correct way to go."
Stocks pulled well off their lows after the comments.
According to preliminary calculations, the Dow Jones industrials fell 100.28, or 1.34%, to 7,365.67 after earlier falling more than 215. On Thursday, the Dow broke through its Nov. 20 low of 7,552.29, and closed at 7,465.95, its lowest level since Oct. 9, 2002, the depths of the last bear market.
The Standard & Poor's 500 index fell 8.89, or 1.14%, to 770.05. The benchmark most watched by traders hovered near its Nov. 20 close of 752.44 but remained further above its Nov. 21 trading low of 741.02.
The Nasdaq composite index fell 1.59, or 0.411, to 1,441.23.
Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to 1.67 billion shares.
The break to fresh bear market lows for the blue-chip Dow and the broader Standard & Poor's 500 index is a worrisome sign. And it could signal that more selling is coming, says Quincy Krosby, chief investment strategist at The Hartford, a financial services firm.
"One thing we know about markets is that selling begets selling, and that is the risk," says Krosby.
Krosby notes that the stock market in many ways is a measure of how the nation feels about itself.
"The Dow is reflective of the national mood," says Krosby. "Right now the mood is very pessimistic and signals a negative outlook and a lack of confidence."
Related Stories
ABC News Live